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CCarr
Canada
1200 Posts |
 Posted - 09/14/2002 : 22:23:41
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The term "business decision" has been used a number of time in the last 24 hours regarding State Farm and Crawford. First, SF for many and varied reasons of their own decided to reduce / eliminate independent usage. Secondly, Crawford became aware of that course of action and decided to propose an alternative. Both are business decisions.
Taking this down to a much smaller scale, I'd like to relate my participation in business decisions with carriers. Each supervisor and manager of any department at a carrier, must define some personal goals or objectives each year that support the corporate function. I was introduced to this in 1975 and it still is an active practice today for those in such positions.
From a claims perspective, you look at what you work with - policyholders, staff, independents, agents, and lawyers. Therefore, you choose from your basket of the things you are exposed to and decide what you could do better at and make a "business decision".
Some of the general things could be to annually - reduce by 5% the number of written complaints from a policyholder, reduce staff turnover by .5 bodies per year, reduce independent adjuster usage by 2% per year, make 3 agency calls per quarter, reduce suits against the company by 5% per year. Each of these is tangible and measurable, and becomes a branch or regional business decision.
Let me zero in on the reduction of independent adjuster usage. It formed one of my goals each and every year, for 12 years. Now, the average usage figures have probably changed and there is little comparative value between carriers, due to staff make up and the mix of their underwriting book.
I remember in 1975 that the IAU was about 20%, and this would include subscription policy claims - a much more prevalent type of policy back then due to reduced line limits compared to pre "9/11" 2001. The branch had a general mix of business with no heavy emphasis on any line. As our volume grew, staff proportionately grew, and our experience deepened. From our level down on the pecking order, we looked at units of usage, not dollars at that time. Again, you have to factor in each carriers views on what constitiutes a file that should have field people involved. However, it was not a big deal to reduce this down to 18 claims per 100 from 20. Frankly, I don't think any independent even noticed that from where I sat.
Then in 1980 when I go to another carrier that had just carved into stone the regional concept and I headed out west. We walked into an exisiting office that did not write any auto, nor any homeowners - only commercial property and pure casualty at the time - and the exisiting IAU was 60% spread among about 20 IA vendors; unfortunately based on who provided the best and most frequent prezzies to the soon to be departed incumbent. Quite a task ahead! I quickly became known as the "hatchet man". First, I do not believe that a branch or region needs more than 2 quality vendors per major city, and that was a big uphill battle with the local IA fraternity. Then, those that had a company car (i.e a field adjuster) had to learn to get back in the field and stop examining files. After 5 years of that, slowly working away at it, plus the carrier adding auto and homeowners, the IAU was down to about 25%. As a business decision I did not see much more flexibility in that ratio, those in the Ivory Tower saw it otherwise, and rejected my goal of 24% for the following year and reinserted 20%. I knew I could not convince them otherwise, they had made a business decision at a higher level. In adapting to that mandate, I introduced what became known as the "task" assignment, I likely wasn't the first but it was new to me, the region and the IAs in the region. I made a business decision to utilize IAs where I felt it was required without them being assigned the file. In basic terms it would be a "task" for them to attend scene, get statements from (whomever), take photos, scope loss, and close. They knew that if "something" along that trek threw a curve at them, they were to call. To introduce that concept was a struggle and fought by the IAs, bear in mind that all other assignments previous or otherwise after were full assignments on T&E. Several of my chosen vendors surfaced in time and saw the benefit to their cash flow, they made a business decision that it was good for them. The "task" assignment became to the regional office and to the IAs utilized a good relationship and beneficial business decision for all concerned.
Hopefully, this will help some understand that business decisions are required up and down the ladder. |
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Gale
USA
231 Posts |
Posted - 03/03/2004 : 12:50:40
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Insurer drops coverage along South Carolina coast. http://www.usatoday.com/money/industries/insurance/2004-03-03-southcarolina-insurance_x.htm
While this is a different type of business decision then Clayton initially addressed it is one that does effect CAT adjusting. I see a trend when carriers like Nationwide stop writing often a smaller or less known (big but one that does not advertise) large companies will step in and do the underwriting. Another thing I have noticed is the higher the quality of customer service standards a carrier has is the less likely they will ever trust a CAT vendor with CAT claims. As the larger carriers make the business decision to pull back (become smaller) across the US and the vacuum is filled with carriers that shun using outside adjusters as associated with CAT vendors (not so mush the IA firms like Frontier, AmeriClaim, Eagle, IMS, IAS, etc or other locally owned IA shops) what can the CAT industry do to not loose that segment of business? I am not just talking about improving the work product to an acceptable standard but how can the CAT industry work to change the “right after hell freezes over” view of when they will use CAT vendors that employ you?
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Ghostbuster
476 Posts |
Posted - 03/03/2004 : 17:33:07
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| "Business Decision" = "I was just following orders, Mein Herr!" |
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Business decisions - relative to a carrier
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